“They were not sabre-rattling – they were serious. We realised we had to come
to a decision.”

The source said David Cameron and George Osborne had been pushing for
“something on onshore wind for their backbenchers” – confirming that the
Prime Minister and Chancellor wanted the subsidy cuts of more than the
originally planned 10 per cent.

However, it was denied that Mr Osborne had ever sought 25 per cent cuts – the
figure demanded by Tory MPs.

“The Treasury crunched the DECC (Department for Energy and Climate Change)
numbers about four or five times and the findings were always the same – 10
per cent was the right figure for on-shore wind,” the source said.

Among the foreign-based investors in on-shore wind in Britain are EDF, the
French-based energy company, as well other firms and investment funds in
Japan, the US, Norway, Sweden, France, Spain, the Netherlands and Germany.

Earlier this year The Sunday Telegraph revealed how the energy industry
employed lobby firms to fight plans for larger cuts in subsidies and drafted
in “eco-activists” to drum up support for new wind farms in the face of
local opposition.

Tory MPs vowed to carry on the fight for larger cuts. Nick De Bois, the MP for
Enfield North, said: “I do not believe the case for onshore wind has been
made.

“It is for the Government to decide on policy and the detail of subsidies, not
the energy companies. If this is the position of the industry, it is very
disappointing.”

Backbenchers will step up their campaign for larger cuts in on-shore wind
subsidies in the autumn. Mr Davey has signalled there may be another review
of the programme – if new evidence shows that the cost of producing on-shore
wind has fallen.

If there is a further review, it will begin in around a year’s time and any
subsequent larger-scale cuts would only apply to wind farms built after the
spring of 2014.

A source close to Mr Davey said the deal proved he was “not a walkover” and
was able to fight just as hard as his Liberal Democrat predecessor as energy
secretary, Chris Huhne.

“Chris did a lot of banging the table in Cabinet and poking people in public.
Ed is different but he has shown he wants to play a key part in the greenest
government ever and cannot be pushed around on a point of principle.”

Nobody from the Renewable Energy Association, the trade body for the
renewables industry, was available for comment.